Net profit margin is the share of revenue that remains after all expenses, including operating expenses, interest, and taxes, have been deducted. It reflects overall profitability.
Formula
Net Profit Margin = Net Income ÷ Revenue
Example
If Net Income is $120 and Revenue is $1,000, Net Profit Margin = 12%.
Why it matters
Net profit margin captures end-to-end efficiency: pricing power, cost control, financing structure, and tax strategy. It’s essential for comparing bottom-line performance across companies and periods.
